It is 1993. The Panama Canal handles about 165 million tons per year, tolls are $3/ton, and annual revenues are nearly $500 million. A demand study estimated that much more tonnage would flow through the Canal in the future, so long as sufficient capacity was available. This study ignored the effects of tolls and delays. It concluded that demand could increase to 363 million tons/year by 2020 and increase to nearly 500 million tons/year by 2060. The Panama Canal Authority has decided upon the following plan for expanding the capacity of the canal: Acquire additional locomotives and install a navigation system by 1995 (at a total cost of $140 million) Start work on widening the cut so that it can allow bi-directional operation of Panamax ships by 2008 (at a cost of $2 billion) Double the tolls when Panama gains control of the canal in 2000 in order to: Increase the funds available for investing in capacity improvements Encourage the use of Panamax vessels Provide a means of avoiding congestion at the canal Complete the third set of locks by 2020 at a cost of $4.3 billion Widen the cut for bi-directional operation of Post-Panamax ships by 2025 at a cost of $1 billion The Panama Canal Authority anticipates that this plan will: Provide sufficient capacity to meet demand through 2060. Allow construction to be funded from toll revenues, without requiring the authority to borrow money or to sell bonds to finance the expansion. Allow a fairly constant rate of investment in infrastructure from 1994 to 2025. The plan immediately received widespread applause from most of the world’s shipping community, because it would allow cheaper ocean transport and eliminate the possibility that the Panama Canal could become a bottleneck that restricts international trade. However, potential opposition to the proposal is expected from several sources: Politicians in Panama Bulk shippers International construction companies that have the ability to finance and construct multi-billion-dollar infrastructure projects Environmental groups in Panama What complaints or objections do you anticipate? As the executive director of the Panama Canal Authority, how would you respond to this opposition? You may consider defending your plan, modifying your plan, giving some sort of payment to those who would be hurt by the plan.